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CIGNA pays disability benefits for 10 years, offers a lump sum buyout and then denies disability claim

After 10 years of receiving disability benefits and a lump sum buyout offer by CIGNA, this claimant’s disability benefits were denied. This case is a sad example of the fact that a disability claimant can never assume that their disability benefits will continue to be paid indefinitely. Therese Regan was formerly a lab technician employed by the Pactiv Corporation. By virtue of her employment, the plaintiff was, at all relevant time, a participant in the Pactiv Corporation’s long term disability plan which was administered by CIGNA.

The case of Therese Regan vs. CIGNA Corporation d/b/a CIGNA Group Insurance and Pactiv Corporation concerns a former Pactiv Corporation’s Lab Technician who recently, through a disability attorney, filed a lawsuit at the District Court for the Northern District of New York against the CIGNA Corporation for wrongfully denying her claim for disability benefits.

The Claim for Long Term Disability Benefits Against Cigna

On August 16th 2000, the plaintiff sustained an injury due to a fall in her home. As a result of the injuries, the plaintiff was unable to perform the duties required of her occupation. As a result of her disability, the plaintiff filed a claim for disability benefits with CIGNA on January 2001. On February 13th, 2001, CIGNA approved the plaintiff’s claim for long term disability benefits. On April 2001, the plaintiff’s claim for Social Security Benefits was approved and she received $880 monthly payment for herself and $440 monthly payment on behalf of her dependent children.

On April 9th 2007, CIGNA made several overtures to the plaintiff to fully settle her claim for $11,276.00. The plaintiff elected not to accept the offer as CIGNA was obligated to increase her monthly disability payment from $139 to $534 when her daughter attained the age of 18 on June 5th 2008. According to the plaintiff, assuming that the plaintiff remained continuously disabled, CIGNA would then have to pay her in disability benefits over the life of the plan in excess of $93,000.

According to the lawsuit, consequently, CIGNA conducted surveillances on the plaintiff and requested a Functional Capacity Evaluation (FCE) to revaluate her eligibility for continuing disability benefits payments. Although the FCE found that the plaintiff was disabled under the plan, CIGNA conducted a peer review of the plaintiff’s records on January 2010 and made a determination that the plaintiff was no longer eligible for continuing disability benefits payments on February 2nd 2010.

On August 2010, the plaintiff filed an ERISA appeal to CIGNA’s decision to terminate her claim for long term disability benefits. In the appeal, the plaintiff submitted sworn affidavit from her attending physician that the peer review report contained numerous inaccuracies. Nevertheless, despite all efforts by the plaintiff, CIGNA denied her appeal on September 23rd 2010.

Disability Lawyer Sues CIGNA for Wrongful Disability Denial

The plaintiff alleged that CIGNA actions to deny for claim for long term disability benefits were unreasonable and a breach of its fiduciary duty as it maintained its denial of the plaintiff’s claim without any medical evidence to demonstrate that the plaintiff was not disabled. The plaintiff also alleged that CIGNA had relied on patently false information obtained from the peer review report conducted on the plaintiff’s medical file.

Relief Sought By The Plaintiff

Due to the alleged unlawful actions of CIGNA, the plaintiff is seeking from the Court the following remedy:

There are 20 opinions so far. Add your comment now.

Jeri Howard:

I am currently receiving long term benefits from The Hartford. I was awarded social security with backpay. The Hartford is now demanding the backpay and then some. I immediately began to catch up bills and now do not have the complete balance. In spite of the SS they should make payment over the SS amount which they will not. I cannot survive without the money from The Hartford. What are my options?

Thank you.

Attorney Greg Dell:

Jeri,

If you have an overpayment that is correctly owed to Hartford, then you don’t have too many options. You can ask Hartford for a payment plan. You can also seek a lump sum buyout of your policy with Hartford.

Veronica:

I have Cigna and I have been out of work for 9 months. With my medical condition my doctor said I could never work again. Cigna paid me for short term disability for six months. They paid me for long term disability for one month and then denied me. My condition has not changed since I stopped working and my long term disability is for six months. What can I do to get me paid?

Attorney Greg Dell:

Veronica,

It is likely that your Cigna Disability Claim is governed by ERISA. This means that you are required to file an ERISA appeal to Cigna within 180 days of the denial. We handle disability appeals on a daily basis. Please contact us for a free consultation and we will discuss your options with you immediately.

Regina Moore:

I have a hearing on the 28th of Feb., Reliance Standard has supplied a lawyer for me through the Advocator Group who will represent me at the hearing. They tell me that my case is strong for getting approved for SSDI. They keep advising that I will need to let them know as soon as I receive my backpay if approved. Have you ever received or heard of a case where they will allow me to pay them a lot of it, but not all, and make payments on the rest or if they agree then they can not pay me all that they say they will a month, which is the difference from what SSDI check is? Ex: if I receive a check for $1000 through RS LTD and I only get approved for SSDI check $800, then RS will pay me the $200 difference.

Attorney Greg Dell:

Regina,

Most of the disability companies will allow you to have a payment plan, but if you send the money that you get from SSDI directly to the disability carrier upon receipt, then you won’t have an overpayment issue. For all future checks the disability company will automatically deduct the amount of the SSDI payment from your monthly payment.

Bryan Prather:

I have been recieving LTD benefits since Aug 2010. I was denied after a Functional Capacity Exam. I appealed it as I was bedridden for nearly two weeks after that test. I told the physical therapist that my leg was getting numb and my groin area was hurting. I went on disability from a ruptured disc which led to arificial disc replacement and fusion surgery. I won the appeal and benefits kicked back in. My policy according to them is a five year benefit which would pay me until Oct. 2015. They offered me $5,000.00 last week for a payout. I cannot return to the job I had as a truck driver nor the sales job I had in food wholesale for years. My employer called me and said that Cigna wanted to offer a payout and she told me that she had just been on the phone with the rep and he told her the payment would be no more and no less than the payout to Oct. 2015. I said to give me a week to consult. Called Cigna and they could not even find my file. So as it stands I told them no on the $5000.00. I cannot find anything that says my benefit was a five year benefit. Why would the HR person who just got off the phone with Cigna tell me the benefit payout would be equal to payments until Oct. 15th? I have applied for SS benefits and my hearing is in May in person. I am not well. I used to backpack, rock climb, lead youth trips, golf, hike, swim, train in martial arts… I can do none of that now. I have been through a plethora of anti depressants, pain meds both narcotic and synthetic. My family life has suffered, my quality of life. Mentally it is the hardest thing I’ve ever faced. I am 52 in June and until this injury I could run circles around many that are half my age on the basketball court. I guess my main concern right now is whether to negotiate a much higher payout and try to use the money to invest in a home business. However, $5k isn’t going to be even close. What do I do?

Attorney Greg Dell:

Bryan,

First, $5,000 sounds like a minimal offer if you are supposed to be paid until October 2015. I don’t understand why your employer is communicating with Cigna. This seems inappropriate. We have negotiated hundred of buyouts with Cigna. Contact us privately and we can discuss your current situation.

Billy J. Carter:

I went on STD in June 2012, then LTD in December 2012. In June 2013, United Mutual of Omaha, my insurer, said I would have to file for SSDI. They offered me at no out of pocket expense a a law group, social security law group, to file for SSDI for me. The fee for the law group will be automatically deducted from my SSDI back-pay. Just got forms from law group and they said same about their fee, and they would represent me on my behalf in any recovery of offset over-payment to long term disability, stated it would be to my benefit for them to manage payback as I would receive 5% up too $400 of they payback amount. In the forms they sent they are requesting in writing my bank account information so as to swipe any offset payback direct from my account as soon as it is received. They said this was an option to give the information now or at a later date. They also said they would record a phone conversation with me first to verify the amount to be withdrawn. First, I don’t have a copy of my LTD policy as it was paid for completely by my employer. My LTD carrier told me back before they referred me to the lawyer group I would probably owe most of my back-pay from SSDI if my case is won and that I would be contacted by their over-payment people to work out a payment plan. Should I trust the lawyer group with my bank info or just wait to see if my case for SSDI is approved then try to work out over-payment with my carrier and is their another option as to not payback SSDI back-pay at all? I am approved for LTD untill age 66.

Attorney Stephen Jessup:

Billy,

If you do not feel comfortable providing your banking information you certainly do not have to. However, as you noted, you will have to contact Mutual of Omaha in the event you are awarded SSDI benefits and provide them with all award letters and documentation so they can determine the over-payment owed. Mutual of Omaha will collect the money owed one way or another, so there is no real “option” to avoid paying back the SSDI lump sum back benefit check.

Tommy:

I became disabled in 2007. I have a employer provided Group (Insured) plan with Standard. My policy contains “ALLOCATION OF AUTHORITY” or Discretionary Authority language. I discovered that the state (WASHINGTON) where the policy was issued in 2009 has banned this language from any/all health or disability policies. I complained to the State Insurance Commission. I received the SPD in 2002. The state questioned Standard and I received a letter from the carriers attorney saying this language was no longer a part of the policy/spd that it was removed in it’s entirety and that future policies/SPDs would no longer contain these provisions.

My question is whether the language in effect when I got the policy (2002) is the controlling policy or the language revision in 2009?

The attorney went on to say that this language removal didn’t really have much significance. It only determined the choice of law if a suit or claim was denied. I disagree, if it was not that pertinent why do insurance companies put up such a fight in defending this authority. I have been disabled since 2007 and currently in the ANY OCCUPATION category. I know it is just a matter of time that I will be cutoff for whatever reason they decide.

Would appreciate your comments.

Attorney Stephen Jessup:

Tommy,

Normally your claim is governed by the policy that was in force at the time you went on disability. Later revisions usually do not have any effect on your claim. From the limited facts before me, my impression is that your claim would be governed by the 2002 policy.

Andrea:

I am currently receiving LTD from Cigna. My employment has been terminated due to exhaustion of their leave policy. Even though terminated from my employer will I still be paid by Cigna? I have applied for Social Security Disability with the help of Allsup. I’m just concerned about my income since I just found out today I am no longer employed.

Attorney Stephen Jessup:

Andrea,

Being terminated from employment while on disability is common once all leave and FMLA time is exhausted. As you are on disability and were a covered employee at the time you became disabled, your right to benefits began the date you became disabled. As such, termination from your employer will have no impact on your right to continued benefits from Cigna.

Ron L.:

I am receiving disability benefits of $2,923 per month from Prudential. Start 5/2007. I would like to receive a lump sum settlement since my benefits don’t have an automatic Cost of Living Increase. They will continue until my full retirement age in 2027. I also receive Social Security Disability.

I have applied on my own for the settlement and have been denied.

I really don’t trust that they will continue my benefits although my disability is permanent. I am afraid they will try and weasel out of the payments or go belly up.

Attorney Stephen Jessup:

Ron,

Please feel free to contact our office to discuss your options with one of our disability attorneys. Prudential is selective with the cases they will offer lump sum settlements to, and there are times that even with an attorney attempting to negotiate a settlement they will refuse based upon their internal criteria.

Doyle:

When LTD ends from your group policy, can the insurance company collect any money from your retirement pension from work? I cannot get my pension until LTD is complete according to my policy.

Attorney Stephen Jessup:

Doyle,

When your LTD benefits end under the policy, the insurance company would have no right to any retirement pension benefits you receive from your employer. If you try to take retirement while still on disability then the company would most likely have the right to offset your disability benefit by any amount you receive from retirement. So if you don’t draw on your retirement until AFTER your claim is over, there should be no problem.

Steve:

Went on LTD with CIGNA in 2010, then they closed my case in 12/13, citing the two year any work rule. In my case that was not relevant, but with cherry picking, discounting my doctor’s opinion and selective pro Cigna review of medical records and a one sided medical review they closed it.

I have ESRD, require daily treatments and have other medical issues. I appealed and was denied, as CIGNA hired a medical doctor who disputed my doctor and medical records. I made a secondary optional appeal with CIGNA and had two Kidney Doctors and one disability doctor attest to my total disability. I also told CIGNA they had breached their fiduciary responsibility to me completely and explained how, citing recent cases. One case has been remanded by the 6th Circuit, but opens the door for this consideration. In the final appeal my doctors’ submitted complete tests and more to CIGNA. CIGNA approved my appeal and paid back several months. I have followed my case on line and noticed it was still closed. I contacted them and was just told it was being reviewed by the settlement team. They will open it and pay monthly until the settlement is offered.

What percent is the best settlement, if taken, e.g., 80%? I am paid $1700.00 and will be eligible for 9 years. My disease is life threatening, but it is possible I will live that long with my daily treatments.

If I refuse the settlement can CIGNA force me to take it or else?

Attorney Stephen Jessup:

Steve,

You have no obligation to take any buyout offer from Cigna. I would not expect Cigna to offer you a lot of money in the settlement as being lowballed is common in the insurance industry. When Cigna does make an offer to you please feel free to contact our office to review same and to determine if we can assist you in securing more.

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